A man whose terrorism convictions were quashed after it emerged he had been illegally deported from Zimbabwe at the behest of MI6 is entitled to compensation because victims of miscarriages of justice have the right to be presumed innocent, the court of appeal said yesterday.

The ruling in the case of Nicholas Mullen, 55, stated that the Home Office was wrong to deny his compensation claim because it believed he had only been freed on a technicality.

The appeal judges gave the home secretary, David Blunkett, leave to appeal to the House of Lords, but if their decision is upheld, the Home Office could face claims from hundreds of prisoners who have been denied compensation on the grounds that having their convictions quashed did not prove their innocence.

Lord Justice Schiemann, sitting with Lord Justice Rix and Mr Justice Pumphrey, said prisoners were entitled to the same "presumption of innocence" they had before they went to trial.

The 1988 Criminal Justice Act did not say that the state could "proceed on the basis that a wrongly convicted man is guilty", Lord Justice Schiemann said. "Had parliament intended that compensation should only be available to those who could prove themselves innocent, it would have said so clearly."

Mr Mullen's lawyer, Louise Christian, said the ruling was a reinforcement of a defendant's rights, and showed the court of appeal had decided on a broad rather than a narrow definition of what constituted a miscarriage of justice.

"There is no halfway house. Either you are guilty or you are not guilty. This says you cannot be found not guilty by the court but remain guilty in the eyes of the home secretary."

Mr Mullen, from north London, was sentenced to 30 years in prison in June 1990 for conspiracy to cause explosions.

He was alleged to have acted as quartermaster for an IRA unit in London. Police said he fled to Zimbabwe in December 1988, hours before Semtex, detonators, incendiary devices, mortar bomb equipment, firearms and ammunition were found at a flat he had rented in Battersea, south-west London.

Mr Mullen, 55, who has always denied the charges, was freed in February 1999 after the court of appeal held that his prompt deportation back to Britain following his arrest in Zimbabwe was a serious abuse of the extradition process. MI6 had "leaned on" Zimbabwe's intelligence organisation, saying that Mr Mullen should be deported to the UK "in short order". Mr Mullen was arrested, denied access to lawyers, and taken to London.

He successfully appealed against his convictions on the grounds that he had been brought to trial unlawfully.

The Home Office refused his claim for compensation, a decision that was upheld by the high court. The court of appeal overturned this, rejecting Mr Blunkett's argument that a miscarriage of justice denoted only cases where the accused had proved he had not committed the crime.

Lord Justice Schiemann conceded that if Mr Mullen "did engage in the dastardly conspiracy of which he stood accused, then imprisonment was an appropriate punishment".

But that was not the approach of the law. "I do not consider that parliament intended proof of innocence to be a prerequisite of entitlement to compensation."

Mr Mullen said he was disappointed the Home Office could appeal. "I have been waiting four years for compensation." The Home Office confirmed it would be appealing.